Minneapolis deal will close Kmart, open road and development

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Vehicles pass the intersection at Nicollet Avenue and E. Lake Street.
Vehicles drive past Kmart at the intersection of Nicollet Avenue and E. Lake Street in Minneapolis.
Ellen Schmidt | MPR News 2017

Updated 2:45 p.m.

City leaders said Thursday they have a deal that will shut down the Kmart on Lake Street, paving the way for the development of a key commercial tract and the long-sought reopening of Nicollet Avenue.

Under the plan, the city would pay Kmart’s corporate owner $9.1 million to end the store’s lease on or before June 30. The lease was scheduled to expire in 2053.

The full City Council is expected to vote on the agreement March 13. If approved, the city would start the process of demolishing the store and working with the community on a new street and development plan, the city said in a statement.

The Kmart project is viewed by some leaders as one of the worst planning decisions in Minneapolis history. The city in the mid-1970s was stuck in a struggling economy and trying to find partners that would help with an economic rebound on Lake Street.

Kmart, however, was the only retailer interested, and its executives drove a hard bargain. They demanded the city shoehorn a standard, suburban-style big-box store onto a city lot. That meant closing Nicollet at Lake Street permanently.

The deal announced Thursday will reopen Nicollet, helping reconnect city neighborhoods and spur development plans, including a plan for a future streetcar line, the city said. City Council President Lisa Bender described it as “the final piece of the puzzle to make it a reality.”

"This is a thing we have been working on for a long time," said David Frank, the city's director of community planning and economic development. "It's been a big goal of the city's. There are council members who have not been here for awhile and mayors who have not been here for awhile who had a lot to do with making this happen."

Kmart has been paying the city just 38 cents per square foot per year in rent for the land. Real estate experts say the market rate is much higher than that.

Ending the lease on the Kmart land will give planners full control of about 10 acres in the heart of south Minneapolis. They’ve been piecing it together since 2015, when the city spent $5.25 million to buy the Supervalu site next door. Two years later they spent another $8 million for the land under the Kmart.

Frank said if the City Council approves, work will begin soon.

“We’ll start working right away on the timing of the demolition of both of the buildings, the grocery store and the Kmart store,” he said. “And we do expect demolition of both buildings to happen later this year.”

Frank added that workers at the store — the last Kmart left in Minnesota — were told about the plans Thursday morning and will be put in touch with the state services for dislocated workers.

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